Business

Deposit for NI first-time buyers set to rise to over £40,000 by 2027

First-time buyers in Northern Ireland could be expected to stump up over £40,000 as a deposit in 2027

FIRST-time buyers in Northern Ireland will need over £40,000 for a deposit in ten years according to new industry research.

UK mortgage adviser L&C Mortgages has revealed that a first time buyer in the north could pay 41 per cent more for a deposit on a house in 2027, a colossal £41,755 on average. According to the UK-wide survey the average deposit first-time buyers pay is currently £29,682 and is expected to rise to by 20 per cent in 2022 to £35,528 and then by another 18 per cent in the succeeding five years.

The average deposit paid by first-time buyers in Northern Ireland is considerably less than the UK average, which sits at £51,821, according to the research. This is also expected to rise at a higher rate than in north, increasing by 57 per cent in ten years to reach highs of £81,468. If this upward trajectory continues as expected then first-time buyers in the UK could need 28 per cent of a property's value as a deposit. In London the average deposit required is expected to rise by a mammoth 75 per cent to almost £250,000 in 2027 from the current average just shy of £140,000. The city is recorded as having the highest deposit required currently and in 2022 and 2027 and also is expected to experience the sharpest increase over the next decade. Deposits are set to rise across the UK, with the required amount rising by 62 per cent in Brighton and Hove and 59 per cent in Bristol by 2027. By contrast Belfast is set to experience the lowest level of inflation (41 per cent) in average deposit over the same ten year period.

David Hollingworth from L&C said first-time could be forgiven for giving up hope on owning their first home.

"There is some stark variation between cities but the fact that London deposits could be almost hitting a quarter of a million pounds by 2027 is alarming. It makes sense for first-time buyers to try and raise as big a deposit as possible but that is very much easier said than done in today's current climate."

L&C also looked at the attitudes of first-time buyers in the UK, asking how they are planning to raise their deposit. On average, first-time buyers expect 44 per cent of their deposit to come from their own cash savings, with a further 15 per cent coming from a Help to Buy ISA and 6 per cent coming from a Lifetime ISA. A further 11 per cent is expected to come from a sum from parents or other family members, and 6 per cent will come from an inheritance.

“Pulling together a deposit continues to represent one of the single biggest challenges and these forecasts will make frightening reading for aspiring first-time buyers. As a result the Bank of Mum and Dad will no doubt continue to play an important role for those attempting to get on the ladder. Parental and family assistance will often help to build a deposit but can also see them providing a guarantee or additional collateral, to secure the mortgage needed," Mr Hollingworth added.

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